Formed by ex-Blizzard and World of Warcraft alums in 2005, Red 5 Studios has spent the past three years working on a massive multiplayer online game that's so far been kept completely shrouded, without a single screenshot or even its title released to the public.

As speculation continues to grow over whether or not Red 5 will ever come out of "stealth mode," the studio recently announced a surprise shuffle in management -- former president and CEO Mark Kern, who served as WoW's team lead while at Blizzard, stepped down from his positions and is now Red 5's Board chairman and chief creative officer.

Michael Weingartner, previously the company's Engineering VP, took over as president and CEO. He joined the company in March of this year, his résumé including executive positions at Oracle, HP, and Talking Blocks.

Kern and Weingartner recently talked with Gamasutra about their new roles, the company's global plans, and the advantages and challenges of using a microtransactions-based revenue model.

Could you talk about what led to Red 5's recent changes in management?

Michael Weingartner: Well, more and more, as the company grew, we got into what I would call an operational phase, where we're really focused on production and planning across the team for a production schedule.

The business and operational sides were taking a lot of Mark's time. Most importantly, they were taking Mark's time away from the game and the design of the game, which, is not only were he's happiest, but that's where we get a huge value out of him.

It's been in my background, from years at Oracle and HP and other companies, to really do large, complex operational tasks. So, it became kind of an obvious step for us to just have me run the operational side while Mark focused on the creative side.

That makes sense. You hear this a lot everywhere, different ways. It seems that it becomes impossible to be creative and run the business side at the same time. And different people end up having different solutions to that problem, whether it's leaving companies, founding their own studios, or stuff like this.

Mark Kern: I'll add that I've been in this industry a long time. It used to be that game studios were seven to 15 people when I started. When you're doing a next-gen game, and especially when you're doing an online game, those numbers quickly balloon.

We have two facilities -- one in Shanghai and one here. These are serious businesses with a lot of operational needs and a lot of money behind them. And you're right, you can't be in both. I don't even think that founding a small independent studio these days is the way to do it, because you will quickly find that you're going to have these scale issues in order to be competitive in the marketplace.

I wanted to ask about your background at Oracle and other companies -- it's not a game background, but how much of that expertise in overseeing software development on that sort of scope maps to the sort of project management of a creative endeavor like games?

MW: When you talk about the complexity of the server side of the stack and the complexity of the asset pipeline, it maps very nicely. Creative content, art content, and the design process have some significant differences. Fortunately, I have also had a strong love of gaming in my background since childhood.

I've played a lot of the games that the designers, producers, engineers, and artists here created over the years, so it was a nice fit to come here and be able to work with them, take advantage of my past skill set, and learn something new in the process.

Have you guys talked, publicly, about what your staffing level is at right now?

MW: We're at just over 100.

Is that in both locations, total?

MW: Roughly split, about two-thirds in U.S., the rest in China.

Is the Chinese studio essentially an outsourcing studio?

MW: No. They're very integral to the company, the team, the business model. We have predominantly artists there. We also have some engineering there.

Is your intention to take this product global, launching it in Asian markets simultaneously with Western markets? What's the market target?

MK: We built this company to be a global company from day one. We do intend to have a game that appeals as much to the East as it does to the West. And in terms of the timing of these launches, as you know, it's very complicated with an online game. We are looking at [releasing to] some markets simultaneously, and some on a very quick roll-out schedule.

We know that you've got a lot of talent, and you've got some exciting ideas. But it's all been very under wraps. So, where is Red 5 at right now?

MK: [laughs] Well, I think you're right. We're kind of known as being just under stealth mode; we're kind of famous for it. I think it's because we've got a really dedicated bunch of people here that are working really hard on some new ideas that we're pretty excited about.

That said, we anticipate that the next thing you're going to hear from us is an announcement, and that's what we're planning on right now. We're kind of in the meeting stages, planning that out, and we're pretty excited because it's going to be the first time that we get to show everyone what we've been working towards.

There's a certain expectation that you guys, at the very least, are working on a fantasy MMO project. Is that a fair characterization of what's going on right now? Are you still resisting classification, or..?

MK: Well, we've said before that ... we're not trying to be a sequel to WoW. Even though [we've] got some heritage there with the studio, you should recognize that we've got a lot of talented people from a lot of different game studios and a lot of different reputations. And we're not exactly interested in recreating the experience of our former heritage.

I think that we're very interested in what types of new online experiences we can bring to the gamer. And yet, at this point -- kind of saving it for the announcement -- we're not categorizing it in any particular way.

Looking at the MMO business that you see right now, some of the launches and closures that have taken place over the course of this year -- notably Age of Conan, which had a strong launch, but is not performing as well any more; Warhammer launched strongly; and Tabula Rasa is closing -- how do you see the landscape out there right now?

MW: We always think there is a market for a strong, triple-A title. I don't think that any of the titles you just listed really fall into where we're going, where our interests are. So, that said, I don't think the current trend that you've seen worries us too much.

Clearly, you must see an opportunity out there to fulfill something that can coexist in the market, that can fill a niche. Do you think people overestimate the market, more in the sense that they think they can put out a game that has essentially good qualities and stay successful? That doesn't seem to be the case anymore?

MK: It's always the case that you have to be an exceptional product. And I don't think that differs in the MMO world, even in what we call the boxed-game market, right? Things like console and PC boxed-game sales -- in both cases, only the top games ever really break even or make money.

And I think that it's just so heightened in the MMO field because there's so much fewer titles in the area. But, at the same time, I'm encouraged by the fact that you don't have a top-10 list of MMOs, where every top-10 game is making money. So, in that sense, using that sort of logic, we think there's lots of room in the West to grow.

You can look to Asia and see that they've got plenty of games in the top-10 category that are making money, and see that that's actually going to come over here. There's probably going to be a lot of blending. You see boxed games getting a lot of online features. You see online games moving towards the production values and the quality, more consistently, of boxed games. So, I think that it's going to be a very interesting future for gamers and game companies ahead.

MW: Yeah, the financial models are an interesting thing, because I think [the subscription model] almost lends itself towards an a Boolean all-or-nothing. Whereas, you look at the Asian models, they definitely allow for the opportunity for a scale of success more readily.

You've pretty much prefigured my next question. Your thoughts on business models that should be adopted -- subscription versus microtransaction, free-to-play? Do you have a preference? Is it something that you're willing to talk about as a company right now, what you favor and why?

MK: It's very interesting to watch how these models work, because I don't think there's any one answer. I think you have to look at the type of game that you're making, and even the market that you're in.

For example, in Asia, there are very few subscription-based games left, aside from WoW and Lineage, for example. And just culturally, there's a very different expectation there for how you monetize these games. So, we're paying a lot of attention to that.

On the other hand, in the West, you have an expectation of a level playing field, and if there are going to be things like microtransactions, they shouldn't affect that balance. We're very cognizant of that as well.

That said, there are plenty of companies paving the way for the idea of a microtransaction basis, especially in the console world, where you have a lot of downloadable content.

It's going to be an interesting future out there. We haven't selected a business model yet. You can expect it to be competitive with what other triple-A games are doing out there, but it's a very fluid situation right now.

What's interesting is maybe even asking ourselves, "Hey, how does the economy figure into this? What about the current financial situation that all these homes are going through? Are games really immune, or are people going to be saying, 'Listen, I don't want to pay a huge monthly fee. I want some other way to pay for my game?'" That's another factor that we have to pay attention to.

MW: Which all ties back to the whole design process of the game. And we've been very careful in the design process to accommodate the revenue model.

That's absolutely crucial, and especially going back to what was said about Western players expecting no unfair advantage. They want a work-based economy, rather than getting to the top through purchases made with money. And that's something that some developers, even, are very strongly against. It's something that has to be treated with a lot of care, especially if you're trying to appeal to a traditional audience of fantasy-MMO gamers.

MW: Yep, we've seen that duality.

Who is your audience for your product? Is it the same audience that might be playing any one of these other fantasy MMOs right now, or are you hoping to attract some people who are not quite the same audience?

MK: Well, by saying that we're not trying to make a sequel to WoW, that automatically sets us apart from targeting the exact same audience, right? And that's not to say that there isn't a significant set of the WoW audience that we're interested in. I think that we're interested in those WoW gamers that have, perhaps, broader play experience, that have a large palette of games that they enjoy, and we're trying to pick experiences that target them.

So, you could say it's a subset of WoW, and something else -- something else that we feel we've identified in the core gamer audience.

With Tabula Rasa, it just wasn't finished. It had a bad beta, and then, when it came out, it wasn't there, despite the fact that it had a very lengthy development cycle. And with Conan, it sounds more like the problem is the high-level content's lacking once you get through the beginning of the game.

These are major problems for MMO titles. How you can you address them, moving forward, with the complexity of these games increasing and the development costs becoming more and more expensive?

MW: Have faith that we look very closely at what other companies are doing and how they succeed or fail. That said, I don't think it's our place to comment on other games, other than to say we pay close attention to where we could do better in our design.

Something that was discussed in a prior interview we had with some of your designers was the fact that the players will have an impact on the world from a gameplay standpoint.

MK: It kind of sounds like a somewhat oblique question about user-generated content. Is that true?

The interview that we conducted previously talks a lot about tabletop RPGs and what effect it has.

MK: Yeah, but you're tying it back into the content question, right?

Yeah. What is that in your game?

MK: So, it sounds to me like part of your question is really: what are we doing differently in the game to create more of a..?

Yeah. What are you doing, I guess, and what is your aim with it?

MK: It's pretty much on the face. We want players to actually change the state of the game over time. Time is a very important concept to our game. We play with it in any number of ways. It is probably our key form of persistence, more than, say, geography, which kind of ties back into your content question. It's more about how this world evolves over time, versus how big your world might be. I think, it's all about what you do with it.

In that way, it's a little bit more information about what we're talking about, but we really can't be more specific until the announcement.

That is kind of a new way of looking at things, in the sense that most MMOs do spend a great deal of resources on building worlds. And that's expensive. Content creation is a relatively expensive resource in game development, versus creating sort of a different paradigm that's based on "for the game, for the players." It could have a lot of potential.

MK: Yeah, you could see that as the fundamental way that we're looking to shift some things around and, like you said, change the paradigm.

Do you have a time frame for the game announcement?

MK: No. We're currently in discussions about that. [laughs] In the coming months.

Fair enough. You have to be looking at not just the competition in terms of what's out or what's on the market already, but also in terms of upcoming titles. Some major titles that I'm looking at are Trion World, who has an unnamed fantasy MMO. There's Star Wars, from BioWare, and 38 Studios has a title. Do you have any thoughts on your position against upcoming titles, as well as current market titles?

MW: To the extent that there's information available, we're always trying to make ourselves aware of the landscape. And again, I think Mark managed to do a very great thing early on; he chose a niche that's still, we believe, wide open for us.

MK: I'll also add that, while we do scout out the other titles in development, we're not too concerned about it. We kind of think about it as running like a sleigh race or a marathon, where it's really important to keep your eyes on the finish line of what's going to make your game really fun to play, and not be looking over your shoulder too much. That could really be distracting from reaching the end there.

MW: Yeah, we've taken great steps to identify the game aspects that make this a game people will want to play and that will keep people playing it over an extended length of time. And those are very central to how we designed the game.

Do you find that any of the discussions about the morality of MMOs, from the developer standpoint, of creating games that encourage devotion -- I hesitate to use the word addiction, but devotion. Where do you see that as relevant to your efforts?

MK: We provide fun experiences. It's up to parents and individuals to moderate their time in fun experiences. I think, we don't have any qualities that differ from any of the other, usual hobbies out there.

MW: I don't think there's anything inherently negative about the social aspects of MMOs, if you approach it maturely. I think the social aspects are very important to us, and we believe it's a central part of what we're doing as well.